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Panama’s Bearer Shares Debate Heats Up

Article Summary:

In Panama debates are firing up about bearer shares and the subsequent requirements for tax information in what some officials call the “club of rich countries.” Panama is indeed going through a tax revolution, but will the direct impact on the competitiveness of the country be positive?

Photo Credit: Maritime Lawyers

Original Article Text From Martes Finaciero via Google Translate :

Who’s Afraid of the OECD?

Eduardo Morgan Jr. took the floor and had enough with one minute and 11 seconds to set Panamanian more radical position against the Organization for Economic Cooperation and Development (OECD). Firstly as buzzing bees and then as the sound of a downpour, the intervention was heard in the main meeting hall of the Chamber of Commerce, Industries and Agriculture of Panama (CCIAP) shortly before the end of the forum overall OECD project.

It analyzed the situation in the country controlled foreign affairs. “Do you studied if countries [OECD] have the system of Panama lawyer resident agent in the public registry consisting resident agent who is and who are the directors of the company, the which is open to the public by law to meet our customer? “, asked the panel of exposure.

This was comprised of representatives scholars country platform and services to an audience of at least 100 people dressed in formal attire. Following asked “know the opinion of the Attorney General’s Office into the Panamanian Public Registry lawyer resident agent, who is required to know the customer and do not allow anyone to hide behind a bearer share to knavery with a corporation’s grab without you? “.

He closed with this statement: In that regard, in Panama does not have any history. Meeting Outside Morgan Jr. emphasizes more strongly: “The Government should be aware that the OECD , which is not an international organization but a club of rich countries, such as The Economist called and Paul Krugman, winner of the Nobel Prize in Economics, 2008 – which seeks to do away with its competitors.

Among them are us. ” brilliant intervention of Morgan Jr. illustrates how the debate will live on the suggestions of the OECD aimed at enhancing the transparency of tax information management. The agency argues, for example, which is needed eliminating bearer shares because through them may incur tax evasion offenses and from other jurisdictions, and even facilitate the consummation of illicit and terrorist financing or money laundering.

Panama Figure
In stock bearer constitutes one of the main attractions for foreign investors. Guarantee a significant flow of investments from abroad. in 2011 grew by 18.7% compared to 2010, ie 789 million 2000 dollars. Estimated at 300,000 the number of registered corporations. Exhibitors at the appointment panel of CCIAP offered their positions relative to the OECD and many words, unless there was consensus that it must take into account the comments multilateral agency in handling tax information, especially now that Panama did shake off the title of “tax haven.”

But there was also consensus on the obligation of putting the country’s interests and then adjust to national regulations requirements foreign and agreements negotiated and signed. “Priority is Panama, that should be clear. The second is that North should not move anything to take away our competitiveness until the other countries make the same sacrifice. Otherwise, customers will stop coming to our place, to go to other more attractive, “predicts Gian Castillero, a member of the International Bar Association.

Without saying, this statement refers to the member countries of the OECD sometimes present compliance standards below those required to jurisdictions outside the body. And they have to reach a non-binding global forum, but with the power to influence the decisions of its members and their business relationships and resolutions other multilateral organizations, including the Inter-American Development Bank (IDB) and the World Bank.

Shows that the ability to influence the offers the Minister of Economy and Finance, Frank De Lima, recognizing the impact of the removal or immobilization of bearer shares. “The country is suffering economic sanctions by private financing arm of the World Bank, the International Finance Corporation (IFC). Since 2011, IFC has restricted funding to banks operating in the square and whose structure is a Panamanian corporation, by the fact that Panama has failed the Phase 1 peer review process.

“Once retired Panama from the list of countries considered tax havens, multi-year effort that ended on July 7, 2011 after having signed 14 double taxation treaties (DTT) and an information exchange treaty fscal (TIA, for its acronym in English ), still overcoming stage 1. stage is technical parity in assessing the existing legal and regulatory infrastructure for exchange of tax information.

This process checks the availability of the tax content, access to authorities and the existence and implementation of a network of agreements. Under this assumption, “in August 2011 requested a supplemental report to the effect that the situation in the country is considering re-evaluate the legal changes made ​​during the last year and the network agreements negotiated to date, “said Frank De Lima. In September 2011 “received a draft supplemental report, informally, prepared by experts from the OECD,” says Leticia Arias, deputy director of the International Taxation Department of Revenue . Comparing the document sent by the OECD with local developments, the government realized that the country’s situation “did not change significantly,” said the official.

Inability to exceed Phase 1 involves a number of possible effects negative: discriminatory measures the G-20 or countries with which agreements have, up to the possible termination of the treaty; interference in the future agenda of the OECD measures of other agencies, and inclusion in lists discriminatory jurisdictions. It was thought to be derived from the requirements phase a year later, ie in this month, and again go to the OECD for comment on the results achieved so far.

It was the student’s exam with your class tutor. had not immobilized bearer shares, refrain from making changes to the rules on customer knowledge and the lack of a law to regulate locally the offshore company accounts, forced the postponement the review by January 2013. The student asked for an extra period. Detailed One issue concerns generating more lawyers and executives of the service platform is the comment made ​​by the OECD on 16 July, concerning Article 26 of the Model Convention.

This gives the possibility to request tax information from certain groups of people. “We are committed to maintaining our protocol model is not listed as applications allow fishing expeditions. Panama will maintain an active bilateral agenda with key partners, and will continue to seek agreements with current standards, which are those that apply today at the Global Forum, ‘which involved being in the country, “says Frank de Lima.

“Panama is opposed to this kind of interpretation, wider. We are willing to cooperate in any international investigation into specific cases, but not in those using generic groups of people, “he adds Castillero. Today the cooperation mechanism, the source explained, is met by the research done in each country to exhaust all stages.

Should the procedure be insufficient, they have the opportunity to seek cooperation from the other party for the remaining elements. “It is very unbalanced,” he says. At Castillero argument is joined by Morgan Jr. This says that frankly do not see any pro to this clause, but many against.

“Government should not accept the changes suggested by the OECD without making a real defense of the interests of our country and should consult with the pillars of our economy service and not proceed, as it did with the tax information treaty with the United States, to sign it without consultation “, requires Morgan Jr . Jose Romero, vice president of CFS Investment regulation, believes differently. He points out that sooner or later Panama as an international financial center will gradually have to bet what the rest of the world will demand in terms of transparency.

“The worldwide trend is towards transparency, not just fiscal. What we want is that the information that flows through these treated nets can be used not only for tax purposes, but to prevent other crimes such as money laundering from drug trafficking, human trafficking and the financing of terrorism. ”

Silent Revolution
OECD’s postulates always break a homogeneous system in the application of accounting standards. “Most developed countries have a tax system based on residences and homes. But in Panama applies different territorial tax system that does not tax income Panamanians abroad “compares Maritano Rolando Garcia, the National Bar Association.

The difference between the systems should be reduced to as little as possible, as a result of treaties signed by Panama since 2009. “This has brought the country to improve its tax system. Act 52 of 2012 is proof of this, since it includes the issue of transfer pricing for all taxpayers with related party transactions or abroad.

But new issues are very few fully understand, “notes with concern Ruben Bustamante, partner at BDO. Other Matters “brand new” in tax matters that have been modified or adjusted to “greater transparency” is be analyzed in detail because they have repercussions that affect the “professionals, entrepreneurs, consultants, market, trade, “lists Bustamente. “We are talking, for example, the permanent establishment and tax resident. Are dramatic changes in the tax culture “.

Bustamante clean slate proposed taxation. “To reverse, we can use the above criteria and ignore unknown aspects, and later use the rule hard and strong. The time is ripe. ” Because it is the ideal time for a more compact set in international tax cooperation. The country, says Bustamante, has to stay competitive with the greatest possible transparency. “From this also depends on the rating of Panama in the risk rating firms.”

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From Martes Finaciero

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